St Otherwise Sst v. Mfp
Read the full judgment text of FCMC 7467/2009 on BabelCite. This Family Court judgment was delivered on 12 August 2022 before Her Honour Judge Sharon D. Melloy.
Matrimonial Proceedings and Property Ordinance – Variation of Maintenance – Full and Frank Disclosure – Costs – District Court – Husband relocated to New York – Non-disclosure of assets – Maintenance increased for wife to HK$137,000 per month – Maintenance varied for child to HK$23,000 per month – Costs awarded on indemnity basis for husband's summons – Undertakings partially discharged
Legal issues: Variation of Husband's Maintenance Application · Variation of Wife's Maintenance Application · Variation of Child's Maintenance Application · Husband's Financial Resources and Non-disclosure · Backdating of Maintenance · Discharge of Undertakings
Outcome: Husband's summons dismissed; Wife's maintenance increased to HK$137,000 per month; Child's maintenance varied to HK$23,000 per month; Costs awarded to Wife.
Cited by 2 cases · Cites 4 cases
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FCMC 7467/2009 [2022] HKFC 168 IN THE DISTRICT COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION MATRIMONIAL CAUSES NO. 7467 OF 2009 ----------------------------
---------------------------- Coram: Her Honour Judge Sharon D. Melloy in Chambers (Not open to public) Dates of Hearing: 20 – 22 July 2021 Date of written closing submissions: 19 August 2021 Date of written replies: 2 September 2021 Date of Judgment: 12 August 2022 ___________________ J U D G M E N T (Variation of Order) ___________________ Introduction 1.There are two applications before the court that now require determination. The first in time is the Respondent husband’s summons dated the 12 June 2020 in the following terms:
2.In other words, the husband seeks to significantly vary the terms of the order entered into by the parties by consent on the 8 September 2010. As will be seen he seeks to vary down the maintenance payments for the wife, that have not changed since 2010, and currently stand at HK$68,000 per month plus the maintenance payments for the only child of the family H, that had, by the time of the summons risen to HK$70,800 per month. He also asks to be released from various undertakings, including an undertaking that he would provide HK$54,000 per month from his housing allowance as a contribution towards the wife’s rental, which originally stood at HK$60,000 per month. In total then, as at the time of the husband’s summons, he was paying or providing financial support for the wife and H in excess of HK$192,000 per month. At the date of the consent summons that contribution was HK$176,000 per month (i.e., wife’s maintenance – HK$68,000 per month, H’s maintenance – HK$54,000 per month and the housing allowance of HK$54,000 per month = HK$176,000 per month). The difference between the two figures is due to a cost-of-living increase for H’s maintenance, which was included in the consent order for her but not for the wife. In addition, the husband undertook to utilize his education allowance provided by his employer for H’s school fees and school bus fees. He also undertook to pay for all of H’s necessary school expenses and to pay an annual amount of HK$120,000 into an education fund. As will be seen this undertaking is important and for that reason, I have decided to quote it in full at this juncture, as follows:
Further the husband undertook to pay for H’s BUPA International medical insurance and for one return business class fare (HK – London) each year. 3.On the 17 November 2020, approximately 5 months after the husband issued his summons, the wife issued her own summons in which she asked for litigation funding, plus a variation up of her own maintenance and that of H’s, to include provision for rental costs in Hong Kong in lieu of the husband’s undertaking in relation to his housing allowance. The issue of litigation funding was dealt with separately and apart from that the summons stated as follows:
Overview 4.It is the husband’s case that that he can no longer afford to pay the wife what he had agreed to pay in 2010, notwithstanding the fact that he has been promoted several times in the interim. He bases this, in part, on his relocation to New York, which he says will ultimately have significant tax implications and will lead to him having less available income than before. He also points to other changes in his circumstances, including the fact that he has remarried and has a child, his current wife has chosen not to return to the workforce in the short to medium term, he is coming to the end of his working life and needs to make provision for his retirement and that it was never intended that he should support the wife in the long term. He also accuses the wife of financial mismanagement. The wife for her part accuses the husband of significant and continual financial non-disclosure, of lying on oath and of otherwise being disingenuous. It is her case that the husband has significant financial resources at his disposal, including other income such as bonuses and that he is able to pay. She says that he simply does not wish to pay. Other issues include the wife and H’s spending patterns, the wife’s non employment and the prospects for her longer term plus her anticipated needs and those of H going forward. Background to the marriage 5.The parties met in London in or about 1995 and married there on the 31 March 2000, having cohabited from about 1998. They are both British and have one child, a daughter H, who was born on the 26 April 2002 and who is now 20 years of age. Early on in their relationship the wife worked as a senior advertising executive for a well-known tabloid newspaper in the UK and the husband for a media agency. The wife has not worked in a paid capacity since 2000, when the parties moved to Japan in order to take up a career opportunity for the husband. She became pregnant shortly thereafter and it is her case that she has devoted herself to H since then. The parties relocated to Hong Kong from Japan in June 2003 and both parties remained in the territory until the husband’s relocation to New York last year. The wife is now 54 years of age and the husband is 59. The parties separated in or about late 2006, after a marriage of 6 years, (which rises to about 8 years once the period of cohabitation is included). H was only about 4 ½ years old at the time of the separation. 6.The wife issued divorce proceedings based on two year’s separation on the 18 June 2009 and the decree nisi was pronounced shortly thereafter on the 14 September 2009. On the 23 September 2009, an order was made by consent for sole custody and care and control of H to the wife with reasonable access to the husband. As indicated above the parties finally came to terms with respect to ancillary relief and an order was made by consent on the 8 September 2010. The decree absolute then followed on the 16 September 2010. 7.The husband remarried about 6 months later, in March 2011, and had a further child, a son T, with his second wife on the 24 August 2012. T is now nearly 10 years old. The husband’s second wife, O is Korean and until recently worked as a senior broker running the Korean desk for a well-known trading company in Hong Kong, earning a base salary of HK$180,000 per month. The husband has never revealed what her total remuneration package was, including bonuses. The family finally relocated to New York towards the end of last year. There was some delay with this because of the Covid-19 pandemic. The circumstances surrounding the consent order and since 8.The parties filed their first round of Form E’s prior to entering into the consent summons in August and September 2009 respectively. These documents provide an insight into their financial circumstances at that time. The husband’s Form E states that he was then the CEO Asia Pacific, of a well-known Advertising and Media conglomerate. In part 3 he says that he received a basic income of HK$258,453 per month, plus a bonus which averaged out at HK$56,000 per month i.e., a total of just under HK$315,000 per month. In addition, he received a housing allowance of just over HK$100,000 per month (HK$101,300), which he and the wife subsequently shared. There was also reference to an education allowance. At paragraph 1.14 of his Form E, the husband describes the maintenance arrangements that the parties had voluntarily entered into following the separation as follows:
9.The wife was living in Stanley at the time and the husband was in Bel Air in Pokfulam. H was attending a prestigious international school namely the C School. Both parties had domestic help – the wife full time and the husband part time. The parties also had access to the American Club. The wife was not working and had not done so by this stage for about 10 years. 10.Unfortunately, and as is often the case, the parties did not have significant assets to match this lifestyle. They sold their property in London prior to the divorce and the proceeds of sale were split between them, although the wife complains that this was imposed on her. In any event according to the Form E’s the husband had approximately HK$4.5 million in his name at that time, which included items that were not immediately liquid including stock options, his MPF fund and other pensions. He held less than HK$1 million in cash. The wife had no assets at all save for a similar amount in cash. It seems likely that the cash most probably came from the sale of the London flat. 11.The husband has referred to a maintenance pending suit order (MPS) and the findings made by my fellow judge, DJ Angela Kot, in that judgment as being somehow relevant to the reasonable needs of the wife at this juncture. With respect I do not agree. MPS is, by its very nature broad brush and capable of revision down the line. It is of no relevance now. What is relevant is the order that the parties entered into by consent and what can be inferred from that. The consent order dated the 8 September 2010 12.The first point to note is that there is no suggestion at all, in any part of this document, that there would be a dismissal of the wife’s claims for income. The order made for periodical payments was a standard order made during the joint lives of the parties or until the wife’s death or remarriage. In the preamble, at the beginning of the document at Recital A, it states that it is intended that the order will be in full and final settlement of the wife’s capital claims only, not her claims for periodical payments for herself. It is also of note that nowhere is there an acknowledgment/agreement or even an undertaking from the wife that she would retrain and seek to find employment for herself in due course. Thus, the husband’s suggestion that it was always understood that the wife would take steps to become financially independent is, with respect, a little far-fetched, although I would accept that there had been some discussions about retraining. 13.It is also clear from the terms of the order that there was insufficient capital for there to be a clean break in any event. The wife received just under HK$4 million from the pot made up as follows:
Although the wife complains now that even then the husband did not make full and frank disclosure of his financial resources, the fact remains that she agreed to this. Further there does not appear to be any evidence to support the notion that there were significant hidden assets. The parties enjoyed a very comfortable life style when married by virtue of the husband’s ex patriate package. They had not, by this point, had an opportunity to accumulate many assets. The wife received a significant share of what they had, and I accept that this was most likely well in excess of 50% of the total pot. 14.In addition, the wife received maintenance that should have been sufficient to cater for her and H’s reasonable needs. As indicated above she received HK$122,000 per month for herself and H out of a total monthly income from the husband of approximately HK$258,453 per month (which did not include the bonus; approximately HK$315,000 per month with the bonus) plus just over half of the husband’s full housing allowance. In addition, the husband contributed to the education fund – the equivalent of another HK$10,000 per month. It is a reasonable maintenance order and should have enabled both parties to have lived comfortably going forward. What happens next is of significant concern and came as something of a shock to the husband. It seems that the wife did not invest any of the capital lump sum, nor did she buy a small property somewhere. Indeed, it was the wife’s evidence that this sum had been spent, in full, by 2014 – i.e., in broad terms an additional HK$1 million per annum on top of the significant maintenance provisions referred to above. She says that she was emotionally floored when the husband remarried and that she sought to over compensate by paying, for example, for friends and family to accompany her and H on trips over seas etc. There is no doubt that some of her capital outlay during this period was also legitimate, e.g., paying for new furniture etc. for a flat for herself and H, but other expenditure was clearly not. This has meant, in turn, that the wife now has no capital of any kind to support her own retirement and future living. It is trite but worth repeating at this point that the wife has no legal claim against the husband for a further lump sum. The wife says that she then got into a cycle of debt and maxed out on her credit cards. This was relieved somewhat when in 2017 she rather shockingly "borrowed" H’s inheritance from the husband’s late father in the sum of HK$452,727. She says that this was with H’s total agreement (H was about 15 years old at the time) and was on the premise that it would be repaid. Given that the wife is not currently working and is once again in significant credit card debt it is difficult to see how this was ever going to be achieved. In the witness box it was asked whether in reality she was asking that the husband pay her extra maintenance so that she could now repay H. She did not really have an answer to this line of questioning. As at the time of trial the wife was said to owe in the region of just under HK$500,000. I do not know what the current figures are. In the closing submissions this sum had risen significantly. I am also not sure if some of this sum related to outstanding legal fees, owed outside of the litigation funding provisions. 15.The other point to note, and what could not have possibly been anticipated at the time of the consent order, is that H is now training as a pre professional contemporary ballet dancer and is studying at the G School which forms part of the University of C. It is of note that although the mother has got herself into something of “a financial pickle”, that some of this has come about because, on her case, of her continued and unswerving support of H. H decided to stay at C school and take the IB programme, whilst at the same time pursuing her dream of becoming a professional dancer. This meant that she has had a significant and expensive dance schedule organised and facilitated by the wife whilst at the same time undertaking serious study. This included extra tuition which the wife said at one time cost in the region of HK$40,000 per month. The dance training would be in addition. It is of note that the wife could have sought financial assistance from the husband in this respect under his undertaking at Recital K (see paragraph 65 below), but that she chose not to do so. She said that she found the husband aggressive at times and that she chose not to rock the boat. 16.Further, H has also attended so called “intensives” during the holidays, which were always held overseas. The parties agreed that these would be funded by the Education Fund. At the time of the hearing there was approximately HK$426,000 left in that fund. It is of note that the parties, have by agreement now transferred this bank account to H for her to manage. 17.H began university in August 2020, but for the first year she attended remotely from Hong Kong, which meant in part attending dance classes during the night. The mother facilitated her schedule including her dance programme, her food, her academic study (she is taking an academic minor) and ensured that she was ferried around by car as required. It is the mother’s case that realistically, given H’s choices, that it was practically impossible for her to retrain or to return to the workforce and that even if she had done so she would not be able to fully support herself or H. Although I do not countenance everything that the wife says, I tend to accept what she says in this respect. The issues 18.These then are the issues to be determined, namely:
The law Maintenance orders 19.Each party’s application for a variation of maintenance is made pursuant to section 11 (7) of the Matrimonial Proceedings and Property Ordinance Cap. 192, (MPPO) which provides that:
20.It is accepted that when looking at a variation of maintenance and in considering a change of circumstances in that context, I may look at the case de novo. In other words, the court is not necessarily fettered by the existence of a previous order. I may look at the situation afresh and make an order based on the parties’ existing financial circumstances. (See Ch 3.131 Jackson’s Matrimonial Finance and Taxation, 7th edition). It is also true that there would normally be a reason for the application to vary or what some might call a “trigger”. 21.The court has a very wide power, including a power to terminate maintenance payments and to backdate the variation ordered. The overall objective is to achieve a fair outcome (see M v M, FCMC 4070 of 1990, dated 12 May 2006, unreported). Other case law 22.The correct approach to an application to vary maintenance was summarized by the Court of Appeal in AEM v VFM [2008] HKFLR 106. In that case the Hon Cheung JA made the following points when setting out the law. Referring in particular to agreements reached by consent as here, he said as follows:
23.This theme was reiterated in a later Court of Appeal decision on variation, WNWG v PBF [2012] HKCU 675, where the Hon Lam J quoting in part from another important judgment on this issue, HCTT v TYYC [2008] 5 HKC 86, added that:
Remarriage and second families 24.The law on this is also quite clear. Although the court is charged with looking at the reality of the situation, if a litigant, here the husband, decides to remarry and have a second family, that does not entitle him as of right to reduce the maintenance to be paid to the first family. See, for example, HYS v SW, unreported, FCMC 11478 of 2003, 6 June 2013. Discharge of undertakings 25.In so far as the undertakings are concerned, it is also not disputed that the court cannot impose an undertaking on a party nor can it vary an undertaking of its own motion. The court may accept an undertaking; it may discharge an undertaking and it may, in some circumstances refuse either to accept a new undertaking or to discharge an old one. The duty of disclosure 26.It is trite, but given the circumstances of this particular case, necessary to state that the law is clear that in any financial application before the Family Court, there is a positive duty on both parties to make FULL and FRANK disclosure of their means. This means that the husband, in this instance, had a positive duty to inform both the wife and the court of all of his financial resources, not simply those that he considered relevant. This included those assets in which he held a beneficial and not simply a legal interest. This duty is ongoing and is independent of any specific discovery that was contained in the wife’s questionnaires. The principle is that both parties to ancillary relief proceedings, which include applications to vary, are under a continuing “duty to the court to make full and frank disclosure of all material facts to the other party and the court”: Livesey (formerly Jenkins) v Jenkins [1985] 1 AC 424 at 437H-438C per Lord Brandon of Oakbrook. As will be seen this did not happen in this case. Indeed, there was a strong “catch me if you can” element to the husband’s evidence. This has led to the parties spending more on legal fees than should otherwise have been the case. It also meant that it was almost impossible for the wife to enter into any meaningful negotiations to settle the matter with the husband, although it is of note that there was one attempt at mediation, which perhaps not surprisingly, failed. 27.It follows that if there has been material non-disclosure, that it is then open to the court to draw a reasonable adverse inference as to the husband’s financial resources and ability to pay. Open proposals 28.Counsel for the wife very helpfully set out the parties’ open positions in tabular form, by reference to the original consent order, in his opening submission as follows:
The husband’s proposals 29.In his affirmation dated the 18 January 2021 the husband also proposed an alternative as follows:
30.It is of note that the court, as has been pointed out by counsel for the wife in his opening, has no jurisdiction to make this order. There is no statutory clean break in Hong Kong as there exists in other jurisdictions and the court has no ability to order a second lump sum payment, although I accept that on occasions litigants may reach an agreement, which can encompass such an agreement and that this can then, in turn, be dealt with by way of undertakings etc. 31.In his open letter dated the 17 June 2021 the husband changed his position as follows:
The wife’s proposals 32.In the wife’s 5th affidavit dated the 7 May 2021 she proposes as follows:
Discussion Should the Respondent husband’s summons dated the 12 June 2020 be dismissed in its entirety, as argued by the wife? The husband’s non-disclosure 33.As I have said the husband has a continuing duty to make full and frank disclosure of all of his financial resources throughout the litigation process. Although clearly there can be argument about whether or not the receipt of a benefit is an asset or whether it forms part of income, generally speaking there can be no dispute over bonuses. These are almost always regarded as forming part of someone’s income stream notwithstanding the fact that they can be variable. In this instance the husband continually made misleading statements about two sums of money i.e., HK$400,000 withdrawn from his account on the 23 December 2019 and HK$4.2 million withdrawn from his account on the 27 April 2020, shortly before he issued these proceedings. In his Answer to the Wife’s Questionnaire dated the 29 July 2020, he says, when asked about the destination of both of these sums, that they went “To its savings account”. With respect this was an ambiguous statement – probably deliberately so. When asked again, he says in his supplemental Answer dated 7 September 2020 that he was obtaining the relevant bank statements. Those bank statements were only produced shortly before the trial. It then transpired that the money had been transferred to his current wife’s sole named account, an account in which he had said repeatedly that he had no beneficial interest. This was clearly untrue. It was only in a letter from the husband’s solicitors dated the 14 September 2020 that he admitted that this was not the case. This was then reiterated in the husband’s 2nd affidavit dated the 18 January 2021 where he stated inter alia as follows:
34.For the avoidance of doubt, I do not accept the husband’s position as set out here i.e., that he had not deliberately sought initially to hide his true income position from the court. That is exactly what he did. It is of note that during the trial he confirmed that he had also regularly transferred other cash to O’s account over the years. The quantum is, of course, unknown. 35.Similarly, with the Harbour One property. The husband continually stated that this was solely owned by O and that he had no interest in it, legal or beneficial. See in particular his Form E filed in support of this application, dated the 26 June 2020. This was later found to be completely false and in the witness box the husband accepted that the property was purchased from joint savings. Clearly, he has a beneficial interest in this property, which is of significant value (thought to be between HK$31 – 45 million). This property is also rented out at HK$65,000 per month. 36.In a similar vein it has proved very difficult to ascertain the value of the husband’s other benefits that accrue to his new and very senior position including 5080 company shares, which the husband simply denies that he owns and other grants of company stock, share options etc. Shortly before the trial the husband disclosed that between June 2020 and July 2021, he received share options of 28,930 stock. Again, this is an example of the husband not making full and frank disclosure in a timely and proper manner. The disclosure was a shot taken by his IPhone of his income and compensation records on his employer’s system. This is completely unacceptable litigation conduct, but be that as it may, according to the wife’s counsel this stock award alone should be worth in the region of HK$15 million. Clearly the husband has significant financial resources at his disposal. The husband’s US tax liability 37.In addition, it is the husband’s case that in truth his net income will fall, when compared to his income in Hong Kong immediately prior to his relocation, because he will be liable to pay 48% US income tax. This is a bald statement, made without reference to proper expert opinion. I am asked to accept this on the basis inter alia of an e-mail from PwC dated the 12 June 2020. It is also of note that rather oddly the husband has not produced a copy of his e-mail setting out the questions that he wished to have answers to. The e-mail states as follows:
38.A couple of points arise out of this. Firstly, had the husband wanted to rely on expert opinion in support of his case then a proper request should have been made for a single joint expert to be appointed. Counsel for the husband says that if the wife does not agree with the e-mail above, then it is for her to challenge it. With respect I do not agree. Rather it is for the husband, in the first instance to make good his case. He has not done so. As the husband said in the witness box, the US tax regime is complicated and he is not a US tax expert. Again, and with respect, neither is the court. Judicial notice is taken of the fact that although it is accepted that the husband’s US tax obligations will most likely be significantly higher in New York than those he enjoyed in Hong Kong, the fact remains that there are many and varied legal ways for those who are subject to that tax regime to legitimately reduce their tax liability. None of that information has been provided to the court. 39.The husband subsequently disclosed a further e-mail dated the 26 June 2021 concerning capital gains tax primarily with respect to rental properties. Again, we are not shown a copy of the questions posed. Alicea Castellanos, the writer of this e-mail, responded as follows:
40.In the wife’s counsels closing submission he states as follows:
Conclusion 41.In conclusion then it seems to me that prima facie the husband has indeed failed to show that he had any proper basis for issuing his summons of the 12 June 2020. In particular, he has not been able to make good his case that his income has fallen (this will be examined in more detail below) and that his relocation to the US is a triggering event necessitating a variation downwards. It is also of note that the husband’s income and financial resources generally have risen significantly since the divorce in 2010. How much maintenance should the husband now pay to the wife for her own maintenance? How should the issue of the rent be dealt with? The trigger 42.In many respects I accept that the trigger for this application was the husband’s original summons. The wife was clear that she would not have issued her own application had the husband not issued his. Indeed, she tried to persuade him to withdraw his summons and seemed willing then to simply soldier on regardless of the fact that she did have a case for an increase of some kind. When the husband refused to back down, she issued her own summons albeit somewhat reluctantly. It is then in those circumstances, that it is suggested by the husband’s counsel that the wife’s summons was a strategic or a tit for tat application. Although that may appear to be the case, I also accept that the wife had valid reasons for issuing her own summons, which cannot be dismissed simply on that premise. On a cost-of-living basis alone the wife was entitled to issue this application, although I accept that from a practical perspective, the legal costs involved in an application of this type can outstrip the practical benefits of making it. The rent 43.The parties agree that the husband should be released from his undertaking at Recital H, with respect to his housing allowance. They disagree on the amount of rental the wife shall be entitled to going forward. The husband’s housing allowance is now significantly higher than it was when the parties entered into the consent summons. The husband’s rent in New York is HK$190,000 per month, which I accept is reduced slightly by a two-month free period to HK$175,000 per month. This is significantly higher than his rent in Hong Kong, prior to his departure, which then stood at just over HK$100,000 per month. The wife for her part has recently moved into a smaller flat, still on South side, for HK$55,000 per month. She was heavily criticized during the trial for not moving into something cheaper, possibly in Happy Valley in the c HK$30,000 per month range. However, it seems to me that she should not be obliged, to significantly reduce her standard of living, given the terms of the original consent order. In such circumstances I accept that the husband shall be released from his undertaking at Recital H to utilize his rent allowance partly for the wife’s benefit and that the sum of HK$55,000 per month, being the wife’s actual rent should form part of her new maintenance order. The wife’s reasonable needs 44.The wife says that she “needs” HK$190,000 per month inclusive of the rental i.e., HK$135,000 per month for herself alone. In her second affidavit dated the 17 November 2020 she set out those needs as follows: General household expenses
The wife’s personal expenses
45.In total therefore it seems to that the wife was originally claiming something in the region of HK$195,000 per month to cover both her general and personal expenses (HK$110,370 + HK$84,334.80 = HK$194,704.80). She has rounded this down to HK$190,000 per month for the purposes of this application and because she had deleted the utility expenses as set out in paragraph 32 (subsection c)) above. According to her counsel this is a “modest” increase given that she has received no increase in maintenance at all for the last 12 years, so on a cost-of-living increase basis alone, it should be allowed. It is of note that the court was not provided with the calculations for a cost-of-living increase of the wife’s maintenance. What would be a reasonable amount of maintenance for the wife? General comments 46.Some of the difficulty here is that the wife seems to have great difficulty in managing her own financial affairs. Although I accept that she has always put H’s welfare and her needs first, the fact remains that if one cannot realistically afford to pay HK$40,000 per month in extra tuition for one’s child, then you should not pay that sum. You need to look at other alternatives. Similarly, if your credit cards are maxed out, perhaps it is not sensible to continue to have your beauty treatments undertaken at a 5-star hotel, because this is “where you have always gone”. The wife’s purchases of top end household items and clothes also makes for difficult reading. It is accepted that she enjoyed and should continue to enjoy a comfortable standard of living, which is achievable given the husband’s financial resources. But she has to also learn to either live within those means or to seek her own employment to supplement them. The wife’s claim General expenses 47.As indicated above I accept that the wife should receive her rental in full. I also accept that the husband should be released from the undertaking that he gave with respect to his housing allowance, given his relocation and that the sum of HK$55,000 per month, which is the wife’s current rent, should form part of her maintenance order. I do not accept that a larger sum of HK$66,000 per month should be entertained. With respect to the other items, I will allow the estimated cost for utilities and household expenses. I will allow a reduced sum of HK$5,000 per month for a helper, most probably part time. The estimated cost of food at HK$16,000 per month, is also high given that the wife will be on her own for much of the year. I will allow HK$12,000 per month. In so far as the car is concerned, I will allow HK$5,850 being the cost of running her current car, but I will not allow the request for a replacement car – which is really a request for a capital payment by instalments. Thus, I will allow general expenses rounded down to HK$86,000 per month as follows:
48.In so far as the wife’s personal expenses are concerned, given her evidence it seems to me that HK$4,000 per month for clothes is a little on the high side (her evidence was that she only wears black and generally T-shirts and trousers/leggings of a certain brand). I will allow HK$3,000 per month. Personal grooming will be reduced to HK$5,000 per month. (Notice should be taken of the fact that HH Judge Melloy attends the Grand Hyatt hair salon). Her request for a holiday allowance is also very high – she will not be able to travel so frequently if she is retraining/working, as she will need to do. I will allow HK$7,500 per month. This is still HK$90,000 per annum which should allow her to travel to the United States to see H perform and travel inter alia to see her sister in Perth etc. I accept that the wife has some medical issues so will allow this estimate in full. The other requests however will not be entertained in full. In particular, the wife will need to repay H’s inheritance monies from her own endeavours. I will allow a further HK$15,000 per month to cover the wife’s other expenses i.e., for her Pilates classes, subscriptions, retraining and the laptop replacement. I have purposefully not included putting money aside for repayment of the inheritance or the credit card interest and bank fees, as I am anticipating that the wife should be able to repay most of her credit card debt as a result of this judgment. Thus, I will allow the following for the wife’s own expenses:
In total then this amounts to just under HK$137,000 (i.e., HK$86, 234 + HK$50,705.80 = HK$136, 939.80). In reality this is approximately a HK$15,000 per month increase (i.e., HK$137,000 – HK$122,000 = HK$15,000). H’s maintenance, that was subject to a cost-of-living increase, has risen by a similar amount from HK$54,000 per month to approximately HK$70,800 per month i.e., an increase of approximately HK$17,000 per month. Thus, even on a cost-of-living basis this rise appears to be in the right ball park. In my view the wife is entitled to an actual modest increase in her maintenance, which should be more reflective of a cost-of-living increase. I am not convinced that she is entitled to a rise in maintenance otherwise. I do not accept that she has a case for a rise to HK$190,000 per month. However, I shall also order that her maintenance shall be adjusted annually on the anniversary of this order each year by reference to the consumer price index of Hong Kong. The wife’s earning capacity 49.As I have already said I do not accept that there was any legal obligation on the wife to return to the workforce during this period, although clearly there was some discussion of it as she refers to retraining in yoga and of possibly taking an anatomy/psychology course in her first Form E dated the 11 September 2009 (section 4.4). However, I largely accept that H has done as well as she has, in part, because the wife has devoted herself wholly to supporting her. But going forward this should not be the case, or at least not to the same extent. I am certainly of the view that the mother should work in some capacity with a view to repaying her daughter her inheritance. As I have already said, I accept that this should not form part of her increased maintenance order and I have not included it in the schedule above. The husband says that the wife should be able to earn HK$20,000 per month. I accept that this is an optimistic figure. The wife has not worked for over 22 years, she did not go to university and she does not speak either Cantonese or Mandarin. I accept that she may need to retrain. It also seems to me that it is imperative that she return to the workforce in some capacity and the sooner the better. How much maintenance should the husband now pay for H? Should any part of that maintenance come from the education fund? Should the husband pay H directly? 50.The parties have agreed that the husband should pay maintenance to H directly and as referred to above, they have also already transferred the education fund to H. The real bone of contention relates to what the original intention was with respect to the education fund and whether it should be used to partly maintain H now. The education fund 51.In short, I accept the wife’s case with respect to the education fund namely that the original intention was that it should be regarded mainly as a safety net, to be used in the unfortunate event that the husband lost his job or was, for some other reason unable to pay for H’s educational costs. Later, the parties agreed that the fund could also be used to pay for H’s “intensives”. But now the husband also argues that the fund should be used to meet H’s other day to day expenses. This appears to be relying in part on a clause in order 3 which states that the education fund should be for H until she reaches the age of 18 or ceases full time education or “until the parties written agreement that sufficient funds have been accumulated to fund H’s education”. 52.A couple of points arise from this. Firstly, there is no agreement that there are sufficient funds in the education fund to enable H to finish her undergraduate degree as planned. Secondly, I do not accept that this was the original intention of the parties, as set out in the consent order (see paragraph 2 above and Recital N). Indeed, it is clear to me that on a plain reading of Recital N, that originally the intention was that the education fund was to be relied upon if a) the husband lost his education allowance and b) he did not have the financial resources otherwise to pay for H’s school fees, school bus and other school expenses. It seems to me that school should be interpreted widely to include college or university. In this instance it is not accepted that the husband does not have the financial resources available to him to pay H a reasonable monthly maintenance figure. Thus, I accept as suggested by the wife at paragraph 32 (e) above, that the remaining sum should be used by H to pay for her “intensives”, off campus training and portfolio work. I will also hold the husband to his undertakings at Recital N, together with order 3. Indeed, this aspect seems to be agreed in part as the husband has said that he will pay into the education fund for the next 2 years as originally planned. What are H’s reasonable needs? 53.Some of the difficulty here is that given that H is a pre professional ballet dancer, her needs are somewhat different from those of a standard student. The husband estimates that she will need US$1,000 per month on top of her other costs such as tuition fees etc, which he will meet. He says that this is a reasonable amount, about double what other parents give their children and that H should be encouraged to work in the holidays in order to provide herself with some pocket money otherwise. He doesn’t particularly challenge H’s claimed expenses, but says that if it costs that much then the additional funds should come from the education fund. The wife says that H needs HK$34,500 per month and that the husband should pay this sum to H and leave the education fund intact. 54.H wrote to both parties in April 2021 and set out what she says her reasonable needs are as follows:
55.Once H’s school fees are deducted one is left with a balance of just over HK$35,000 per month. Some of the difficulty here is that H also seems to have expensive tastes and there is little sense of her seeking to live within a more standard student budget. Of the amount claimed H’s estimated school fees, including tuition and mandatory fees together with her Bupa costs should be immediately discounted as they are dealt with by some of the husband’s original undertakings. I do have some concerns with respect to housing and food (the mandatory dining plan etc) and I will not accept the rather general proposal put forward by the husband i.e., that this is something that father and daughter can discuss directly at the appropriate time. Consequently, I will further direct that either a more appropriate undertaking is included in the recital of the order by agreement or that in the alternative the parties file a short submission (no longer than 3 pages, 14 font double spaced) within a certain time period, whereupon the maintenance order for H shall be varied to reflect her actual housing and food needs for the next two years. In addition, I will allow the following sums in full, namely funds for her school supplies, flights to school, other transport to and from school, uniform for dance, nutrition and health training supplements. 56.I have some concerns with respect to some of the other sums claimed. For example, given that H’s orthodontic treatment is now finished I will only allow her HK$1,000 per month for dental. I also have some concerns about her request for clothing on top of her uniform for dance at HK$3,500 per month plus personal grooming of HK$2,500 per month, in addition to the suggested personal allowance of US$1,000 per month that the husband has already offered to pay. This totals just under HK$14,000 per month, which is a large sum for a student – even a dancing student. I will allow a total sum of HK$10,000 per month for all of these items. There will be no additional allowance for holidays or flights outside of her return flights to Hong Kong. Items of this nature will need to be paid for by H herself from her own endeavours. In total then I will allow the following:
57.Thus, I shall allow H the sum of HK$23,000 per month as opposed to the total sum of US$1,000 per month proposed by the husband and the higher sum proposed by herself. In addition, the husband shall continue to be bound by his undertakings and as offered by him, to continue to pay for H’s tuition fees and other items as set out in paragraph 31 above. As already indicated, I shall also require the payment for H’s housing and food for the next two years to be clarified. Can the husband afford to pay these sums? The husband’s employ 58.There is no doubt that the husband has gone from strength to strength since the divorce and that he is now probably at the pinnacle of his career having recently secured a global COO role in the same media company. The wife sets out his progression in the media and advertising conglomerate in her second affidavit dated the 17 November 2020 as follows:
At paragraph 26 of the same affidavit, she also states as follows:
The husband’s case on his income 59.In his second affidavit dated the 18 January 2021, the husband reiterated inter alia as follows:
60.As indicated above, the husband simply did not come up to proof with respect to this aspect of his case. A number of initial points should be noted at this juncture. Firstly, the court is charged with not only considering the husband’s “fixed income” but also with his “variable income”, such as his bonuses together with his other “financial resources”. Further the court is concerned not so much with his financial position prior to relocation, but with his financial position as at the time that he entered into the consent order. According to his Form E dated the 17 August 2009, at that stage he had a fixed income of HK$258,453 per month plus a bonus of HK$56,000 per month (i.e., just under HK$315,000 per month). It is of note that even on the husband’s own case as set out above, his net income has indeed risen since then. 61.As I have said it is the wife’s case that infact the husband’s income is significantly higher than this. In her counsel’s schedule, she states that the husband currently earns approximately HK$1,890,943.07 per month pre-tax as set out below. It should be noted that I was taken to some supporting evidence with respect to these figures during the course of the trial.
62.Even if one accepts, as I do, that the stock options may be regarded as other financial resources more akin to assets than income, and even if one also accepts that the husband’s bonus is variable, it is clear that the husband has more than sufficient income to pay for the wife and H’s reasonable expenses as anticipated at the time of the original consent summons. This is even if he does have to pay tax at 48% on all of the items identified, which as I have already said is not necessarily accepted by the court at face value. Other points raised by the husband 63.The husband also raises a number of other points in support of his application. Firstly, he references his remarriage and the fact that he has a second son who will surely deserve the same financial support as H. As indicated in paragraph 24 above, although the court is charged with looking at the reality of the situation, it is not possible for a litigant to place his second family above his first from a financial perspective as of right. In any event this is not a new situation. The husband remarried in 2011 and had T shortly thereafter. T currently attends a very prestigious school in New York and is living in a luxurious apartment with his parents. I simply do not accept that the husband does not have the financial resources to properly support T going forward. To that end the husband also says that he may be forced out or choose to retire early given that he is now 59 years old. That is true – but it has not happened yet. By the same token the husband may be offered an even more prestigious position – we simply do not know. The court cannot make orders based on possibilities only. Further, it is also of note that the husband’s second wife has a significant earning capacity of her own and although the court’s cannot directly access her financial resources in order to pay the wife and H, one can expect her to contribute towards her own household if the circumstances required it, which may in turn relieve the husband’s own burden. Should either of the maintenance figures be backdated and if so to when? 64.As indicated above it is trite but worth reiterating at this stage that the court has no jurisdiction to order that the wife receive a further lump sum payment. Further, court orders remain in force until they are varied, unless by agreement between the parties otherwise. So, in this instance I am approaching the final order on the premise that the husband has continued to pay maintenance to the wife in the sum of HK$68,000 per month and to the wife for H, in the sum of HK$70,800 per month, even though on both parties’ cases this figure was to be reduced. The husband’s existing undertakings, as set out in the court order, already include reference to school fees, which is this context should also include university or college fees. Thus, I anticipate that the husband has continued to pay for these items directly, in addition to his maintenance obligations. 65.Under the terms of the new proposed order the husband shall pay an additional HK$15,000 per month for the wife’s maintenance. I am concerned that the wife shall have sufficient funds to pay off the majority of her credit card debt prior to the new order coming into effect. I also anticipate her returning to work in order to make up any difference and in order to repay H her grandfather’s inheritance monies. Consequently, I shall make an order that the payment of the wife’s maintenance shall be back dated to the date of the husband’s summons – i.e., June 2020. By the time that this judgment is handed down that will be a period of approximately 26 months. This equates to a further HK$390,000 to be paid to the wife (i.e., HK$15,000 x 26 = HK$390,000). I shall not backdate H’s maintenance order. This may seem a little unfair at first sight, but I am conscious that to do so may plunge the wife into further debt which she is unlikely to be able to recover from. I also hope that the wife has been sensible with any additional funds pending receipt of this judgment. How should the husband’s original undertakings be dealt with? 66.The husband asks to be released from his undertakings given in recitals F, H, J, K, L (in so far as the airticket is concerned only) and N of the court order dated the 8 September 2010. These state as follows:
67.In so far as these undertakings are concerned, the husband shall be released from the undertakings in Recital F, (American Club) Recital H, (Housing allowance), the second part of Recital L (BUPA and flight to London) which refers to a business class flight to London and Recital K (school expenses). He shall not be released from the undertakings given by him in recital J and N which are partly concerned with the education fund. What order should be made for costs? 68.The wife has been partially successful in her application in that she did obtain a modest increase in her own maintenance payments and the maintenance for H was also varied, when the husband was proposing a significant reduction for herself and a lesser sum for H. The husband’s summons was also dismissed in its entirety and I have also found that he did not make full and frank disclosure of his financial means. In such circumstances it seems to me that the wife should have her costs of and arising out of his summons dated the 12 June 2020 on an indemnity basis from the time that the summons was issued until the husband eventually told the truth on oath, with respect to some aspects of his case, in his affidavit dated the 18 January 2021. After that date he shall pay the wife’s costs on a party and party basis. In both instances costs shall be taxed if not agreed. There shall be certificate for counsel. In so far as the wife’s summons dated the 17 November 2020 is concerned, she shall also be awarded her costs on a party and party basis, such costs to be taxed if not agreed. Again, there shall be certificate for counsel. This order shall be made nisi, to be made absolute in 14 days’ time. Credit shall also be given for the litigation funding provided by the husband to date. Final order 69.Consequently, I shall make an order as follows:
Mr. Timothy Parker instructed by CRB for the Petitioner Ms. Bonnie Y.K. Cheng instructed by Stevenson Wong & Co for the Respondent | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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